Gas-Tax Boost Best Way to Fund Highway Bill, Donohue Says

By Laura Litvan -
Feb 12, 2014

Raising the U.S. gasoline tax above
18.4 cents a gallon is the “simplest and most straightforward”
way to fund a long-term highway bill, the president of the
nation’s largest lobbying group for businesses told Congress.

Lawmakers need to embrace a higher gas tax despite the
backlash over a similar proposal two years ago that prevented
approval of a six-year highway funding bill, Thomas Donohue, the
president and chief executive officer of the U.S. Chamber of
Commerce, said today. The Chamber has endorsed legislation that
would boost the tax by 15 cents a gallon over three years.

“For once, let’s do what’s right, not what’s politically
expedient,” Donohue told members of the Senate Environment and
Public Works Committee at a hearing in Washington.

A lack of consensus on how to continue funding about $50
billion-a-year in highway, bridge and mass transit projects
beyond Sept. 30 led the Congressional Budget Office to warn that
the federal government may have to delay some payments to states
before the fiscal year ends. Committee Chairman Barbara Boxer, a
California Democrat who has proposed replacing the gas tax with
a levy paid on oil at refineries, said she will advance highway
legislation in April, though it won’t address funding.

“I’m hoping for a five- or six-year bill,” Boxer said.

Boxer said she will look to the Senate Finance Committee to
decide how to fund the legislation.

Lack of Consensus

The Highway Trust Fund, which pays for road and transit
projects, is projected to have a shortfall of about $13 billion
for fiscal 2015, the CBO said last week. Business groups have
said infrastructure spending is needed to boost U.S. economic
growth, while benefiting construction companies including
Caterpillar Inc. (CAT)

House Transportation and Infrastructure Chairman Bill Shuster, a Pennsylvania Republican, said last week that he
doesn’t think there’s enough support in Congress to raise the
gas tax, and he suggested that spending cuts or revenues from
oil and gas exploration on federal lands to fund projects. He
also discussed the possibility of user fees to fund future
highway construction that could include a vehicle mileage tax.

“I just don’t believe the American people -- there’s a
will out there in the American public or in Congress,” he said
when asked whether the gas tax should be raised at a Bloomberg
Government Infrastructure event. “Even our president has said,
you know that we’re not going to do that.”

Trumka’s Position

The gas tax makes up the lion’s share of financing for the
highway trust fund, which had about $37 billion in revenue in
2013. That amount included a few smaller sources of revenue,
including a trucking diesel tax.

Boxer has said a higher levy paid on oil at refineries,
which has been floated by research groups including Rand Corp.
and the Carnegie Endowment for International Peace, could
generate enough revenue to fund highways and mass transit for
six years.

At today’s hearing, AFL-CIO President Richard Trumka warned
lawmakers of a dire impact on the economy if a long-term measure
isn’t approved by Congress this year. He told the panel that
employment in the construction industry has fallen by 1.6
million from pre-recession levels.

While other forms of financing could help, including
public-private partnerships, “most of these ideas have
limitations and cannot raise enough revenue to replace the gas
tax,” Trumka said in his written testimony.

State Control

Senators in both parties on the committee said that they
want to see a five- or six-year bill, rather than a short-term
extension of the current two-year law. At the same time, Donohue
drew fire from Senator Jeff Sessions, an Alabama Republican, who
said spending cuts are more appropriate than a gas-tax increase.

“You want to raise taxes on Alabamians who need to commute
to work, and you can spend the money however you want,”
Sessions said.

In both congressional chambers, lawmakers affiliated with
the Tea Party movement have sought measures that would turn
authority for funding highway projects to the states. Senator
Mike Lee, a Utah Republican, introduced such a plan in November
and five other senators have signed on so far. A similar bill
introduced by Representative Tom Graves, a Georgia Republican,
has 39 co-sponsors.